Post-Event Summary - The Commercial Payments Bill and the Future of Retentions

We recently partnered with BCLP for a policy seminar exploring the Commercial Payments Bill and its implications for real estate construction clients and the wider construction supply chain.

The event brought together representatives from Government, clients and the construction industry to discuss the Bill’s proposed reforms to payment practices, with a particular focus on the proposed ban on retentions in construction contracts and what this could mean in practice for project delivery, quality, risk and the wider supply chain.

Commercial Payments Bill

The seminar opened with a legal briefing from Gareth Stringer, Partner at BCLP, who provided an overview of the Commercial Payments Bill, its progress through Parliament and its key provisions. Fergus Harradence, Deputy Director for Infrastructure & Construction at the Department for Business and Trade, provided further context on the Government’s rationale for the reforms and its approach to implementation.

The discussion highlighted the significance of the proposed changes for the construction sector, particularly the move away from cash retentions. While retentions have traditionally provided clients with protection against risks relating to defects, quality and delivery, concerns have also been raised about their impact on contractor and subcontractor cash flow and the wider operation of the construction supply chain.

Panel Discussion

The panel discussion, chaired by Sam Bensted, our Assistant Director, brought together Fergus Harradence; Mark Richardson, Head of Development Delivery at Landsec; and Jo Fautley, Deputy Chief Executive at Build UK.

The discussion explored the reforms from Government, client and contractor perspectives, including the role retentions currently play in managing project risk and how appropriate client protections could be maintained under a new system. The panel also considered potential implications for procurement, funding and viability, alongside considerations relating to quality assurance, defects and higher-risk buildings.

Reflecting on the panel, Gareth Stringer, Partner at BCLP, said:

“The panel discussion provided a valuable opportunity for those present to hear from the Department for Business and Trade as to the Government’s drivers behind the Commercial Payments Bill. It was also a good opportunity for audience members to raise concerns about some of the provisions in the Bill and, in particular, its ban on retentions in construction contracts.

“The discussion during the panel, and during the networking session afterwards, was constructive and positive. It’s clear that the discussion will need to continue to ensure that the changes to be brought about by the Bill can be effectively implemented to achieve the Bill’s aims and drive improvements across the construction industry.”